TV Exec Warns Peers Against Their Deals With Netflix

Starz CEO Says Networks Are Fueling a Rival for Viewers

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A poster for the Netflix original 'House of Cards.'
A poster for the Netflix original 'House of Cards.'

How TV programmers should approach working with Netflix and other streaming platforms became a hot topic during the annual UBS Global Media and Communications Conference in New York.

While TV executives mostly agreed that streaming video services are a friend to the traditional networks because they buy the rights to reruns, at least one said the industry was getting it all wrong.

It is "really shortsighted for these networks to be selling their shows to Netflix," Starz CEO Chris Albrecht, a former CEO of HBO, said during a presentation Tuesday morning. Netflix would not be able to attract consumers, siphoning them away from live TV screens, without the benefit of networks' second-run programming, he argued.

Starz itself previously had a deal with Netflix, but said in 2011 that it wouldn't renew it after it expired in 2012, an announcement that briefly gave Netflix shares a hit. Even as Mr. Albrecht acknowledged that it's difficult for networks to turn down significant payments from Netflix, he called Starz' expired Netflix pact a "terrible" deal.

Mr. Albrecht seemed to be an outlier, however, in an industry generally willing to risk the loss of viewers for the benefit of cash in hand. Executives also hold out hope that viewers who find past seasons of network shows on streaming platforms will go back to TV for newer episodes.

Discovery Communications, for one, announced a deal with Hulu that gives the platform access to shows from across the company's portfolio, including "Deadliest Catch," "Little Couple," "Say Yes to the Dress" and "Homicide Hunter."

Hulu will promote Discovery networks through branded channel pages that feature the each of the network's top shows, Discovery Communications CEO David Zaslav said, calling it one of the highlights of the deal.

Discovery's deal with Hulu makes the content available one year after it airs. The company's current deal with Netflix doesn't make programming available until 18 months after it airs.

CBS Corp. Chief Research Officer David Poltrack argued during a keynote presentation on Monday that Netflix has actually helped drive viewers back to the live broadcast of shows.

While Mr. Poltrack acknowledged that Netflix viewing has begun to eat away at live TV, he also pointed out that broadcasters don't compete with the service for ad revenue. Selling rights to Netflix represents a lucrative business opportunity that helps networks fund the creation of compelling content, he added.

AMC has certainly seen an advantage of making its content available on Netflix. By allowing viewers to catch up with programming on Netflix, shows like "Breaking Bad" have been able to grow their TV audiences in later seasons.

Still, there is a level of caution and care when considering how to license content.

AMC Networks CEO Josh Sapan said the company is careful about what content it puts where and when for each show. There's isn't one answer or formula for how programmers should license content and deals need to be considered on a case-by-case basis, he said.

How networks supply content to different platforms across various windows of time has been evolving significantly. 21st Century Fox Co-COO James Murdoch said the rules for windowing content aren't "set at all," and "have never been set."

"I think windowing is going to evolve and pretty rapidly," he said.

Mr. Murdoch pointed to the recent deal for "The Simpsons" on FXX, which through its TV Everywhere app now makes all past episodes of the show available. Traditionally there would be rules in place that a network could only air so many episodes in a given period to avoid viewer burnout.

"In the absence of those artificial windowing rules, customers responded enormously well," Mr. Murdoch said. "It actually has revitalized 'The Simpsons' brand as well, which is performing incredibly well on linear now on Sunday night."

"I think when you innovate in terms of these windows and you actually create something that is fit for purpose in the 21st century for customers who can have access to everything, they generally respond," he added.

Time Warner Chairman and CEO Jeff Bewkes similarly credited on-demand viewing for reviving the creative process on TV by letting viewers engage with complicated shows that stretch across years.

"That's what's brought vitality back to TV programming," he said during a keynote luncheon on Tuesday.

Mr. Bewkes said "windows are never set in stone." He cited HBO's deal with Amazon a few years ago, which made three-year-old content available on the service. "Now deals are for one year," he said. "I am not necessarily saying that's the right idea, but shows how they move around."

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